Sega Sammy Releases Revised Earnings Forecast

Sega Sammy Releases Revised Earnings Forecast

by October 16, 2012

Role Reversal: Pachinko Faltering But “Sales of Packaged Software Were Strong”

There is very good news to report about Sega’s financial health; it now appears the company is beginning to stabilize after much uncertainty earlier in the year.

The mothership in Japan, Sega Sammy Holdings, released a revised earnings forecast on Tuesday.  The whole company revised downward its sales estimates through the first half of fiscal year 2013, which in Layman’s terms is the period between April 1st and September 30th of this year.

Now, some $1.72 billion of sales are expected, which is a 16.6 percent decline.  Guidance for net income, the final profit a company makes, was also adjusted significantly down to more than $25.3 million, a nearly 43 percent decline.

So where is the good news?  If you’re a gamer, it’s in the fact that the consumer business division will, in effect, prop up the typically strong pachinko and pachislot divisions for the half year, and perhaps for the whole of FY 2013.  Sega Sammy now expects sales in that division to be off anywhere from nearly 40 to 45 percent.

“In the Consumer Business, on the other hand, sales of packaged software were strong,” the statement read.  “In addition, the number of registered IDs for online RPG “Phantasy Star Online 2” for which service started in July surpassed one million and earnings from the service are exceeding projections.”

The statement also implies there will be some accounting trickery when it comes to showing Sega’s strength.

“Some R&D expenses, content production expenses and advertising expenses, which were initially planned to be posted in the first half (of the fiscal year), will be posted in the second half,” the statement explains.

Ultimately, for Q2, Sega Sammy’s statement says tax rates will be behind the company missing its previous earnings estimate.  Still, with word of Sega games doing well again, and anticipation of more success when Phantasy Star Online 2 releases in the web, Sega Sammy’s stock is way up.  As of this article’s publication, it has gained nearly four percent on the trading day to $4.73 a share; this after a sizable gain on Monday and being very close to a 52 week low the middle of last week.